are you the unwitting victim of these money traps that rob your wealth causing you to remain stuck in the rat race of the middle class failing to avoid these traps is detrimental to your financial health and can keep you dependent on a paycheck many people function on autopilot unaware of these simple actions that are preventing them from creating the wealth they want it can seem that there's just never enough extra money no matter how much you earn to spend in a meaningful way like investing for retirement or making purchases that are deemed important avoiding these
middle class money traps especially number one will help you break out of the rat race so you can financially support the lifestyle you desire my name is chris and i help teach people about money personal finance and investing if you're interested in improving your financial future make sure to subscribe to the channel and hit the like button if this video is helpful number 10 not knowing what you're invested in learning the basics of investing is quite possibly the best thing you can do to ensure you have a comfortable retirement because the majority of your assets
over time will be the result of interest from your investments the only feasible way to make sure you're making the right investing decisions for your personal situation is for you to know what you're investing in and the pros and cons related to other options listening to friends and family who aren't financially stable or blindly taking the advice of a financial professional is gambling with your future just imagine two situations where you invest ten thousand dollars and continue investing five hundred dollars per month for thirty years with a seven percent annual return the total amount would
be six hundred and eighty two thousand dollars with a ten percent annual return the total amount would be just over one million two hundred and sixty thousand dollars that's a five hundred and seventy eight thousand dollar difference which could be what you're missing out on if you're parking your money in the wrong investments number nine actively trading attempting to beat the market by purchasing speculative investments in buying and selling during various market movements is a losing strategy it is possible for skilled individuals like warren buffett and hedge fund manager peter lynch to outperform the market
but with investment fees taxes and emotions working against you this is extremely difficult to do consistently if you can merely match the s p 500 which will return you an average of 10 percent annually you'll be doing better than most investors timing the market by selling when the market peaks and buying at the bottom is tempting but this is also more difficult than it sounds when people attempt to do this they become focused on short-term fluctuations instead of keeping their long-term goals in mind which is what they should be doing number eight not tax planning
one of the best strategies for maximizing your money is focusing on your largest expenses such as transportation and housing but taxes are often your largest expense of all because of this it makes sense to take note of what the rich do and maximize your tax situation so you're not paying more than necessary there are many ways to legally reduce the amount you pay in tax which include retirement accounts like iras 401ks and roth iras real estate investments are also favorable when it comes to taxes mortgage interest insurance and expenses help reduce your taxable income and
the property can be depreciated further reducing your tax liability how you earn the money is also a big piece to the puzzle business owners have many opportunities to reduce their taxable income through expenses and write-offs while employees are limited in this way learning ways to maximize your tax situation by working with a cpa will help you hang on to much more of your income sometimes twenty thirty percent or more number seven being unwilling to make changes if you're not willing to make occasional changes to improve your situation you could be missing out on huge amounts
of growth it's normal to fear change because people want to be comfortable they don't want to enter a situation they're unfamiliar with but sometimes it's necessary for advancement one example of change is moving to a less desirable location because it will free up enough of your income to help you reach the next step or taking in a roommate so you can finally begin to aggressively pay off debt begin investing or start a business perhaps a new employment opportunity presents itself where you could be paid 20 more than you're earning at your current job but it
would mean a new boss and a new set of co-workers in an unfamiliar location number six not buying a house buying a home could quite possibly be one of the best investments you make but you have to be careful for those who fit the bill of homeownership this could be a great way to improve your finances the most recent data from the federal reserve shows that the average net worth of a homeowner was two hundred and fifty five thousand dollars compared to just over six thousand dollars for renters one major reason for this is that
homeowners are typically building equity in multiple ways their mortgage is paid down each month until it's eventually owned free and clear and the price of the home is likely to rise this asset could open new doors down the road as it could be rented out it could be sold and the money could be used for something else or the home's equity could be tapped with financing furthermore when you own a home housing costs remain largely unchanged utilities taxes and maintenance costs rise slightly year to year but they remain the same for the most part because
the price paid for the house will never change number five not taking risks risk is an essential part of growth and without it you're going to be stuck in the same place forever how would you expect to progress in life without taking any risk anytime you want to move forward you must assess the amount of risk and reward to make a viable decision this could be in regards to getting a new job changing careers or starting that business that's not guaranteed to succeed but if it does the reward could be life-changing making a large switch
like this is certainly risky what if you don't like it what if the money isn't what you thought any time you invest your money entails risk whether you're investing in a home or holding cash with the threat of inflation you can limit potential downsides when taking these risks by being prepared in the event things don't work out such as having sufficient savings set aside or a plan b number four spending money because you deserve to a common mistake people make is buying items or spending money on experiences because they deserve it they work hard so
they should reward themselves right well there's some truth to this is it really a reward if it's setting you back to a point where you're uncomfortable financially when you begin earning a reasonably sized paycheck you might be tempted to spend money on a brand new car you can finance it so it doesn't seem like a big deal you might think you deserve that shiny new car but carefully consider what it's truly costing you is it really a reward for your efforts if you're stressed about making the payments and it's severely restricting your ability to build
wealth your future self probably won't think so number three claiming you don't care about money a common phrase that a poor person would say is i don't care about money claiming they're fine being broke and exploited by a boss how could this be true when these same people spend 40 hours or more every single week 50 weeks per year and bring home a less than desirable amount of money the money earned now affects nearly every decision about their life they live in a home they can afford not a home they would choose if money were
no object where do they spend the majority of their time working of course when someone claims they don't care about money what they mean is they don't care about having an extreme amount of money from materialistic items it's fine if you don't care about becoming rich but caring about money isn't a bad thing after all money affects all areas of our lives number two keeping the wrong career when students are in high school they're pressured to choose a career path that will keep them happily employed until retirement as you might guess this often results in
young adults going into debt for a degree only to find out their career wasn't what they'd hoped for either the money isn't as good as what they'd expected or the job itself isn't something they enjoy on the other hand many young adults avoid the high pressure of deciding on a better career choice they might become stuck in a low-paying job that won't help them reach their goals while making the right choice before picking a direction is ideal it usually doesn't work out this way that doesn't mean you can't adapt what if you were able to
change career paths and earn double or triple your current income or even more whether you'd like to venture into entrepreneurship or just switch jobs you can do this by creating an action plan with clear defined goals and milestones to complete it number one thinking none of these will work for you one mentality that will never allow you to get ahead is believing none of these principles will work for you they might work for other people but they won't work for me because it may seem like you just can't dig yourself out of a hole but
there are almost always options based on your current circumstances this might not be what you want to hear but the truth is many of these individuals that claim none of these tips work for them are unwilling to make the necessary sacrifices life changes or take the necessary risks in order to improve a situation it may require discomfort or an inconvenience building wealth is certainly easier for some than others but using suggestions could lead you to an improved lifestyle which of these money traps that keep you stuck in the middle class do you fall victim to
and which are you willing to avoid it's critical to recognize these behaviors so you can make the proper adjustments it doesn't take a drastic life-altering paradigm shift to create your future wealth begin avoiding these toxic traps now and you'll be glad you did
